Key benchmark indices recovered some of the lost ground in afternoon trade as index heavyweight Reliance Industries rebounded from early low. The BSE 30-share Sensex was down 279 points. State Bank of India regained the positive zone.

Mayhem in global markets triggered by fears of the state of the US financial system weighed on the Indian bourses for the second day in a row. US investment bank Lehman Brothers filed for bankruptcy, American insurer AIG struggled for survival and Merrill Lynch was sold to Bank of America. The S&P CNX Nifty cracked below 4,000 level.

Realty shares tumbled. The market breadth was extremely weak.

US markets collapsed on Monday, falling the most since 11 September 2001 as investors worried about the impact of the latest twists in the credit crisis on the economy and the outlook for profits. The Dow Jones Industrial Average plunged 504.48 points, or 4.42%, to 10,917.51, the Nasdaq Composite index dropped 81.36 points, or 3.60%, to 2,179.91 and the Standard & Poor's 500 index fell 59 points, or 4.71% to 1,192.70.

Asian markets were trading weak, as fears of a global financial crisis gripped investors across Asia. Key benchmark indices in China, Japan, Hong Kong, Taiwan, Singapore, and South Korea were down by between 1.89% and 6.10%.

At 12:21 IST, the BSE 30-share Sensex was down 279.19 points or 2.06% to 13,252.08. The Sensex opened with a downward gap of 479.54 at 13,051.73, which is also its days low so far. At the days high of 13,297.10 hit in mid-morning trade, the Sensex lost 233.85 points.

The S&P CNX Nifty was down 81.15 points or 1.99% to 3,991.75.

The market breadth was weak on BSE with 2044 shares declining as compared to just 344 that rose. 52 remained unchanged.

The BSE Mid-Cap index was down 3.39% to 5,109.57 and BSE Small-Cap index fell 3.09% to 6,183.12.

The total turnover on BSE amounted to Rs 1788 crore by 12:30 IST as compared to Rs 1227 crore by 11:30 IST

Banking and financial pivotals were under pressure on global financial turmoil. India's largest private sector bank in terms of net profit ICICI Bank plunged 6.67% to Rs 585.60 on 18.06 lakh shares and was the top loser from Sensex pack. Merrill Lynch held 2.59% stake in the bank, as on 12 September 2008.

India's second largest private sector bank in terms of net profit HDFC Bank slipped 2.21% to Rs 1177.50. Indias largest dedicated housing finance company by total revenue, Housing Development Finance Corporation lost 2.37% to Rs 2152.20.

However Indias largest state run bank in terms of net assets State Bank of India rose 0.10% to Rs 1490.50. As per reports, the bank paid 48% higher advance tax to Rs 1560 crore in Q2 September 2008 over Q2 September 2007. It was the top gainer from Sensex pack.

Ranbaxy Laboratories, Indias top drug maker by sales slumped 5.46% to Rs 396.25. The stock has been on sustained downtrend ever since the Japanese drug maker Daiichi Sankyos open offer to acquire an additional 20% stake at Rs 737 a share in the company ended on 4 September 2008.

IT pivotals tumbled due to heavy selling on reports that hedging positions taken by the companies are improper with rupee falling to two-year low against the dollar. Indias fourth largest software services exporter Satyam Computer Services slumped 6.85% to Rs 342.95 and was the worst hit among the IT pivotals. The company said it has bagged a SAP implementation contract from Oman-based Khimji Ramdas LLC. The company made this announcement during trading hours on Monday, 15 September 2008.

Indias second largest software services exporter Infosys lost 1.93% to Rs 1544, after striking high of Rs 1576 in early trade.

Indias top truck maker by sales rose 1.64% to Rs 397, off days low of Rs 377. It was the top gainer from Sensex pack.

Mather & Platt Pumps was locked at upper limit of 20% to Rs 140.50 on BSE after the company said its promoter proposes voluntary delisting of the company from all the stock exchanges. The company made the announcement before market hours today, 16 September 2008.

Welspun India gained 2.56% to Rs 40 after the company said it will demerge its distribution and marketing as well as its investment divisions into two separate firms. The company made this announcement before trading hours today, 16 September 2008.

Crude oil prices plunged to a seven-month low as turmoil in the US financial system heightened concerns energy demand may slow. US light crude for October 2008 delivery fell $3.02 to $92.69 a barrel yesterday, 15 September 2008.

Back home, bears ruled the roost on the bourses for the fifth consecutive day yesterday, 15 September 2008 as key benchmark indices posted substantial losses after US investment bank Lehman Brothers filed for bankruptcy protection. The BSE 30-share Sensex lost 469.54 or 3.35% at 13,531.27 and the S&P CNX Nifty lost 155.55 points or 3.68%, to settle at 4072.90 on that day.